China in 2021: A New Normal in an Abnormal Time

As the world continues to grapple with the COVID-19 pandemic, China’s situation has markedly improved. According to the official data, China had 87,071 confirmed cases with 4,634 deaths in 2020, but only about ten thousand new cases and only two additional deaths in 2021. China’s solutions, including stringent border controls, mass testing, digital contact tracing, isolation of confirmed and suspected cases, and lockdowns of high-risk regions, as well as an aggressive vaccination program, have so far successfully averted another major outbreak. However, as effective as the so-called zero-COVID policy is in containing the spread of the virus, its costs are harder to ignore. A single infection may trigger total lockdown of the whole community, disrupting the livelihoods of tens of thousands of residents. For instance, Nanjing, a city with over nine million residents, tested its entire population five times in July and August after several workers from the airport contracted the virus. President Xi Jinping has not left China for any foreign visits since the COVID outbreak in January 2020. Neither did Beijing host any foreign leaders during the same period.

The economic and social costs are increasingly unbearable, but also the efficacy of this policy is being questioned as the virus becomes more contagious. In the outbreak that started in Nanjing, these strict measures did not stop the Delta variant from spreading to more than half of China’s 31 provinces and infecting about 1,000 people. Many were infected at crowded testing sites. A series of sporadic outbreaks occurred in 2021, and the zero-tolerance approach has been pushed further and further, to its limits. But changes are hard to come by. Zhang Wenhong, China’s most respected expert in the battle against COVID-19, was viciously attacked on social media after calling for “coexisting with the virus for the long term.” The concern is not merely that China’s healthcare system might be overwhelmed by a sudden surge of patients. It is also a political issue, because China has been touting its superiority in containing the virus, compared to Western countries, as evidence of its superior political system. Thus, as long as reducing the caseload remains the principal goal, China will keep mobilizing massive social and economic resources to hunt down every last COVID case.

Long before the pandemic could settle down, controversy over its origins heated up. In May 2020, the World Health Organization (WHO) passed a motion calling for an investigation into the origins of the pandemic. But China accepted only a joint study between one team of Chinese scholars and one international team. In January and February, the joint-study group visited Wuhan, where the first known infections were discovered. The report, released in March, stated that the virus might be transmitted from bats to humans and, to China’s pleasure, that the “lab leak” theory is “extremely unlikely.”

Unsatisfied with this conclusion, President Biden ordered the US intelligence community to produce a new report on COVID origins. In June, he was joined by other G7 leaders in calling for “timely, transparent, expert-led, and science-based” findings. Under pressure, Tedros Ghebreyesus, the WHO’s director-general, admitted that the WHO investigation was hampered by a lack of raw data—because China had refused to share the data on the first 174 infections, citing privacy concerns—and proposed a second phase of studies in China. But, as expected, China rejected any further investigation in Wuhan, calling this a plot to politicize a scientific effort. A massive campaign was also launched on China’s media, lambasting the lab leak theory as an American political trick on the one side, while stoking speculation about a lab leak from Fort Detrick, a research center for the US biological defense program, on the other. The Global Times, a popular nationalist tabloid in China, asserted that it had gathered more than 25 million signatures for a petition to probe Fort Detrick as the origin of COVID-19; yet in March 2020, the Chinese ambassador to the US called this a “crazy” conspiracy theory.

In August, China formally demanded that the WHO investigate Fort Detrick, along with a lab at the University of North Carolina, for COVID-19 origins. On August 27, the anticipated US intelligence report was published. The report denied that the virus was a biological weapon and that China had foreknowledge about the virus. But it was inconclusive regarding the virus’s origins. It admitted that no clear-cut conclusion can be reached without China’s full cooperation. However, such cooperation is highly unlikely. Pinpointing the origins of COVID has indeed escalated into a political campaign. To China, its potential liabilities in this enormous disaster surely matter. But more at stake are its reputation and dignity. Now that it has portrayed the lab leak theory as a smear campaign, any further cooperation might look like acquiescence to foreign bullying and political blackmail.

The year 2021 marked the hundredth anniversary of the Chinese Communist Party. With membership having grown from about 50 to the world’s largest, at 95 million, and from a country teetering on the verge of collapse to the second-largest economy, the Party certainly has a lot to cheer for. In his speech at Tiananmen Square, Xi praised “the great rejuvenation of the Chinese nation” and ascribed China’s achievements to the Party, asserting that the key to China’s further success is to uphold and enhance the Party’s leadership. Slogans on newspapers, buildings, and billboards across the country reminded the people to “listen to the party [听党话], be grateful to the party [感党恩], and follow the party [跟党走].” In the 1980s, Deng Xiaoping advocated that the Party withdraw from government’s daily affairs (党政分开), but nowadays the Party and the state are fully integrated. Because the Party claims “no special interests of its own” and is only concerned with “the fundamental interests of the overwhelming majority” of Chinese people, it is entitled to the authority to regulate all social and economic activities. As Xi constantly put it, “government, the military, society and schools; east, west, south, north, and center; the Party leads everything.” From how many children a family can legally have, to how many hours of online games kids can play each week, and from how many middle-school graduates can go to high school to how young fans praise their idols on social media, 2021 marks deeper and wider penetration of state into many aspects of people’s lives.

In 2021, perhaps no one felt the chill more acutely than China’s big tech companies. For decades, these companies have been given considerable room to operate. Fierce competition in the world’s largest market has attracted capital and talent, inspiring endless creativity and extraordinary innovation. Over the years, the tech industry has grown into the most dynamic and competitive sector in the Chinese economy. Tech giants such as Alibaba and Tencent have become symbols of China’s rise. However, recently these tech titans have started realizing that the wind was no longer at their back. In November 2020, Chinese regulators abruptly canceled what was expected to be the world’s largest IPO—that of Ant Group, China’s leading fintech company—one week after its outspoken founder, Jack Ma, publicly railed against China’s financial regulatory system. In January 2021, Ant Group announced that it would overhaul its business per regulatory directives. In April, Alibaba, another of Ma’s businesses, was slapped with an eye-popping USD 2.8 billion fine. In September, Ant Group started to hand over the credit data of its 500 million customers, the core of its business, to China’s central bank.

What happened to another Chinese tech giant, Didi, is even worse and has become a cautionary tale for Chinese companies seeking overseas listings. Two days after its July IPO on the New York Stock Exchange, the world’s largest ride-hailing platform was banned from signing up new users, and its app was kicked out of mobile stores. To Didi’s institutional owners and shareholders, who have seen the company’s stock price tumble, the worst might be yet to come. The list of 2021’s casualties is long, covering industries such as fintech, media, gaming, cryptocurrency, and tutoring. On the surface, all these are isolated antitrust probes and investigations of data security. Yet at its core, the tech crackdown is a campaign to get China’s “wild west” capital market back on a tight rein. In August, Xi pledged to strive for “common prosperity,” urging businesses and the wealthy to “give back more to society.” Later that month, the business community was shocked again by a commentary from the official Xinhua News Agency that called for a profound revolution that makes capital markets no longer a heaven “where capitalists can make a fortune overnight.”

While American tech tycoons are happy to fight regulators in court, the responses of their Chinese peers are unanimously submissive. Even Ma, who publicly disputed regulators in 2015, opted for acquiescence and hid himself from the public eye. Pony Ma, founder of Tencent, proposed more regulatory scrutiny of China’s digital economy. Soon after Xi’s “common prosperity” speech, both Alibaba and Tencent pledged USD 15.5 billion—more than half of their profits in 2020—to related programs. Apparently, the storm of regulatory clampdown has reminded Chinese business tycoons who is the real boss. Following the Party’s lead is the only way for private firms to survive, if not thrive.

At the same time as the Party was tightening its control of Chinese society, Xi further reinforced his leadership inside the Party. This year (2021) is the tenth year since he took power in 2012. According to the norm of power transition in the Party since the 1990s, this would be the last year of a 10-year term, and Xi should hand power over to the next generation of leaders at the Party’s 20th National Congress, in 2022. But in 2018 China removed the constitution’s 10-year term limit on the presidency, and there is little question that the age and term limits for the Party’s head will fade away as well. It is almost certain that Xi will start a third term as the Party’s general secretary in 2022 and as the state’s president in 2023. However, to make sure nothing goes wrong in this break from tradition, 2021 saw a widespread purge of China’s police and judiciary system. More than 170,000 people, including a former minister of justice and a deputy minister of public security, were punished (some jailed, some demoted, some merely admonished). In July, the nation’s 18th Xi Jinping thought research center was established, focusing on the paramount leader’s ideas on economic development. Starting this fall, courses on Xi’s thought are required for all Chinese students, from elementary school to college. In 1951 and 1981, when the Party celebrated its 30th and 60th birthdays, comprehensive reviews were conducted of the Party’s major achievements. At the Party’s sixth plenary session in November, another “historical resolution” was passed to highlight Xi’s achievements and consolidate his status in the Party and the Party’s history. Without question, all these changes will usher in a new era for the Communist Party since the economic reform.

At a meeting during the annual National People’s Congress of 2021, Xi told his audience that China now can “look at the world from an equal position” (平视世界). However, this turns out to be an understatement of the current attitude toward the West. In a survey in April, 41.7% of respondents said they “look down on” Western countries (Global Times 2021). Nationalism has been running high since the 1990s, but the recent nationalist hype was attributed more to bombastic propaganda. The audacious bragging about the nation’s achievements was enhanced by cherry-picked negative reports on the West. The COVID-19 pandemic was portrayed as evidence of not only a failure of governance in Western countries but also the decadence of their system. When uncensored voices are hard to hear, there is no way to verify how popular these views are or how sincerely they are held among the public. But from Xi’s own words as well as Chinese officials’ behavior, the ruling elites in China seem convinced that the tide has changed, as a rising China faces a declining West. China is ready for a strategic opportunity of rejuvenation “unseen in the past century” (a phrase that appears in many official publications).

China was probably delighted to see President Trump gone after the 2020 presidential election. On January 20, immediately after Biden was sworn in as the new president, China announced sanctions on outgoing secretary of state Mike Pompeo and 27 other top officials of the Trump administration. Accused of “undermining China’s interests, offending the Chinese people, and disrupting China–US relations,” these ex-officials were banned from entering China or doing business with Chinese companies. However, the relief was short-lived, and it did not take long for China to realize that the US’s China policy had transcended partisanship and remained one of the few issues that can unite Democrats and Republicans. On his last day in office, Pompeo outraged China by calling China’s policy against Muslim Uighurs in Xinjiang “genocide” on Twitter. This controversial designation was affirmed by his successor, Antony Blinken, during his confirmation hearings on the same day, and was echoed again by Biden himself less than a month later. In a report released in March, the Department of State formally labeled China’s policy in Xinjiang “genocide and crimes against humanity.” Although Biden was eager to scale back many of his predecessor’s policies, Trump’s China policies seemed to be an exception.

The first head-to-head between China and the Biden administration occurred in March, when Secretary of State Blinken and national security advisor Jake Sullivan held a series of talks in Alaska with Yang Jiechi, director of the Party’s Central Foreign Affairs Commission, and foreign minister Wang Yi. What grabbed the world’s attention was their opening remarks. A supposedly short and purely procedural part of the meeting exploded into a harsh exchange of criticisms lasting more than an hour. After Blinken and Sullivan expressed concerns that China’s actions may “threaten the rule-based order that maintains global stability,” China’s top diplomats fired back, rejecting all these accusations and urging America to face its own problems. Yang’s tirade last almost 17 minutes, far beyond the pre-agreed two-minute limit. As the astounded reporters got ready to leave, they were ushered back in for another round of angry words. It is hard to know whether such a public debate was part of the plan of either side. But the intended audience was apparently not those sitting in the meeting room. It is just surprising to see Yang, a former ambassador to the US who was known for his moderate position, turning so belligerent. His rude words during the meeting, “The Chinese people don’t give a damn!” (中国人不吃这一套), have become a popular nationalist meme in China. Amid the heightened tensions in 2021, there were no friendly pandas in the room, only fearsome wolves.

The March talks in Alaska set the tone for the US–China relationship in the rest of 2021. In May, Secretary of defense Lloyd Austin’s multiple requests to talk to the vice-chairman of China’s Central Military Commission were rejected. His move was called “unprofessional and unfriendly,” and he was directed to China’s defense minister, who has much less influence in the military.

In July, the Biden administration’s effort to get access to China ran into another setback when deputy secretary of state Wendy Sherman asked for a meeting during her visits to East Asia. At first, China only agreed to a meeting with Xie Feng, a lower-ranking vice foreign minister. Nevertheless, unlike with Austin, a deal was ultimately reached; China arranged a follow-up meeting with foreign minister Wang. But at these meetings, Chinese officials blasted America for the problems in bilateral relations. In one meeting, Xie presented Sherman a list of China’s grievances and a list of demands, including more than a dozen specific issues the US should address. In another meeting, Wang draw three “red lines” for US decision-makers. To some observers, these meetings look like Chinese officials lecturing the US on how to behave. Two days later, in the same location, Wang warmly greeted a Taliban delegation, as the Islamist insurgents were swiftly removing the US-backed government from power.

On October 6, following a phone call between Biden and Xi, the harsh rhetoric calmed down a little at the Yang–Sullivan meeting in Zurich. Both promised to “maintain open lines of communications and responsibly manage their competition.” They also agreed to schedule a virtual summit between the heads of the two states in November. Still, as long as China continues to see the US as “the major source of the world’s turmoil” and “the gravest threat to China’s development and security,” it is hard to expect the summit to be a turning point in their relations. Although officials from both sides repeatedly stated that they were not seeking a new Cold War, it is already underway.

During the presidential campaign, Biden frequently criticized Trump’s trade war with China for hurting the American economy. Yet after taking office, he was in no hurry to end it. In March, the Federal Communications Commission announced that communications equipment and service from Huawei and four other Chinese companies posed “an unacceptable risk to the national security.” In April, the Commerce Department added seven Chinese supercomputing companies and research institutes to its Entity List, cutting off their access to US technologies and equipment. Three months later, the list was widened again with 34 more Chinese entities. In an executive order issued in June, Biden expanded the Trump-era sanctions and prohibited US investment in 58 Chinese companies for their connection with the Chinese military and surveillance. Also in June, the Senate passed the US Innovation and Competition Act, pledging USD 110 billion to maintain America’s high-tech edge over China. A group of similar bills was circulating on Capitol Hill. Given the broad bipartisan consensus on China, more bills would land on Biden’s desk. In October, after an eight-month “top-to-bottom” review of US trade policy, Katherine Tai, the US trade representative, laid out the Biden administration’s trade policy toward China. Tai charged that China had failed to fulfill its commitment in the 2020 Phase I trade deal to purchase US products. While she rejected Trump’s “decoupling” from China as “unrealistic” and promised to exempt some Chinese imports from hefty tariffs, most of the tariffs from the Trump administration remained in place. Tai also vowed to use all options and explore new ones to defend US interests. To China, this is hardly a friendly signal: recoupling or decoupling, the trade war proceeded under a different name.

Perhaps the most dramatic episode in US–China economic relations in 2021 was the sudden end of the three-year crisis over Meng Wanzhou, the chief financial officer of Huawei. In December 2018, Meng was arrested in Vancouver on a US warrant. She was accused of financial fraud and violating US sanctions on Iran. While Meng’s legal team fought the US extradition request in the Canadian court, the Chinese government detained two Canadian citizens on espionage charges. Over the years, the case of Meng has become a major obstacle for China to improve its relations with US and Canada. It was also on the list of demands presented to Sherman during her visit to China. In September 2021, the Department of Justice and Meng reached a deal. Meng pleaded not guilty to those charges but confirmed the basic fact that she had misguided banks on Huawei’s business with Iran. Meng was then allowed to return to China on September 25. Around the same time, the Chinese government released the two Canadians (still denying any connections with Meng’s case). Meng’s release was hailed as another triumph. However, the censored discussions on Chinese media about the legal consequences for Huawei and the conspicuous silence of Ren Zhengfei, Huawei’s founder and Meng’s father, do not bode well for Huawei. For this troubled Chinese tech giant struggling at the center of the US–China controversy, the distress is far from over.

Compared with his predecessor, Biden relied more on US allies in handling China’s ascent in the Indo-Pacific. In March, leaders of the four states of the Quadrilateral Security Dialogue (Quad)—the US, Japan, India, and Australia— held their first (virtual) summit meetings since the dialogue was established in 2007. Their joint statement called for a “free and open Indo-Pacific” and a “rule-based maritime order in the East and South China Seas.” In September, in an in-person meeting in the White House, the four leaders sent a strong signal to Beijing by reiterating that their commitment was “undaunted by coercion.” In September, the US, the UK, and Australia signed a trilateral security pact (Aukus). According to the treaty, the US and the UK would help Australia acquire nuclear-powered attack submarines. The Aukus and the Quad, plus the Five Eyes intelligence alliance, have fundamentally transformed the existing “hub and spoke” system of bilateral treaties between the US and its allies.

Between August 2 and 27, the Quad countries conducted a joint military exercise, Large Scale Global Exercise 21, across the Indo-Pacific. At the same time, the US Navy and Marine Corps put on global show of force in Large Scale Exercise 21, the largest in 40 years. Even states outside the Indo-Pacific were dragged into the escalating US–China tensions. In June, NATO leaders deviated from their traditional focus on the Atlantic Ocean and, for the first time in its history, deemed China a “challenge” to global security. In September, the EU unveiled its Indo-Pacific strategy, vowing to “promote an open and rules-based regional security architecture.” Three European countries, France, the Netherlands, and Germany, have laid out their own Indo-Pacific policies. France participated in a handful of joint exercises in the region in 2021. In August, Germany dispatched a frigate to the Far East through the South China Sea. As the balance of power in the region keeps shifting in China’s favor, more states are expected to take part in this “hedging” game against China.

On June 23, 2021, readers of Apple Daily, a Hong Kong pro-democracy newspaper, received the notice they had feared for a while: this newspaper would cease its operations the next day. This was hardly a surprise, though. In April, its founder, Jimmy Lai, was sentenced to 14 months for “organizing illegal protests.” Earlier in June, the Hong Kong police raided the newspaper’s offices and froze its assets. After midnight, tens of thousands of Hongkongers waited in long lines to purchase the last edition of Apple Daily. A million copies, ten times the normal run, were sold out before 8 Am. The fate of this tabloid symbolized the remarkably changing political climate in Hong Kong. The 2020 National Security Law provided a convenient legal cover for the Hong Kong government to clamp down on dissent. Activists were arrested and sentenced; pro-democracy civil organizations, including the 50-year-old Student Union of the Chinese University of Hong Kong, were disbanded; liberal media were silenced; movies were censored; the traditional June 4th Vigil and July 1st March were banned. In current Hong Kong streets, it is no longer safe to wear a white flower, light a candle, or yell a slogan. In 2021 Hong Kong saw its ranking in the Democracy Index plummet from the 75th place in 2019 to the 87th (Economist 2021).

After swallowing the disastrous defeat in the 2019 District Council Election, in which pro-Beijing candidates won only 14% of the seats, Beijing was determined to expunge the pro-democracy forces from Hong Kong’s political life. In January 2021, 54 prominent politicians and activists from the pro-democracy parties were arrested for organizing and participating in a primary ahead of the Legislative Council (LegCo) election of 2020 (later postponed to 2021). During a meeting with Hong Kong’s chief executive in January, Xi said that “Hong Kong must be administrated by patriots,” kicking off the campaign to overhaul Hong Kong’s electoral system. In March, the National People’s Congress amended the Basic Law of Hong Kong with sweeping changes to the electoral system. First, the Election Committee, the electoral college to select the chief executive, expanded from 1,200 to 1,500 members. Most of the 300 new members are from groups loyal to Beijing. In addition, existing functional groups are revised and reorganized to minimize the chance of pro-democrats. In the election for the new session of the Election Committee, in September, eligible voters dropped a whopping 97%, from 246,440 in 2016 to only 7,891, and, to no one’s surprise, only one pro-democracy candidate was elected. Second, the total seats in the LegCo were increased from 70 to 90. But the seats from democratic elections were reduced from 35 to 20, and all candidates must be vetted by a new committee. The next LegCo election is scheduled for December 2021. The new LegCo will certainly be another party of patriots.

The political situation in Hong Kong has caused widespread concern in Western countries. In March, Blinken issued a report, saying that the revision of the electoral law undermined Hong Kong’s autonomy and violated the Sino-British Joint Declaration. The Biden administration sanctioned 37 Chinese and Hong Kong officials. Both the US and Canada announced special immigration policies for Hong Kongers. In late January, the British government reformed the British National (Overseas) Passport (BNO passport), which would allow as many as 5.4 million Hong Kong residents, more than 70% of the city’s population, to live and work in Great Britain and eventually become British citizens. The British government estimated that between 258,000 and 322,000 Hong Kongers would apply for the BNO passport within five years. In response, China announced it no longer considered the BNO passport a legal travel document. In June, the National People’s Congress passed the Anti-Foreign Sanctions Law, authorizing the government to take countermeasures against foreign sanctions. A month later, the law was invoked to impose sanctions on seven US citizens and entities, including former commerce secretary Wilbur Ross. On September 24, China’s Foreign Affairs Ministry published a fact sheet on “US interference in Hong Kong affairs,” listing 102 specific activities since 2019. Under the Anti-Foreign Sanctions Law, each of these could develop into a case for sanctions against US citizens and entities, giving Beijing abundant ammunition to escalate the diplomatic row over the Special Administrative Region.

October 10, 2021, marked the 110th anniversary of the 1911 revolution (which put an end to China’s thousands of years of imperial rule), and the national day of the Republic of China. At a commemoration of the 1911 revolution, Xi vowed to achieve China’s “complete reunification” and warned those who pursued Taiwan’s independence of “no good end.” Taiwan responded with a military parade and a defiant speech by president Cai Yingwen, who asserted that Taiwan will not “bow to pressure” and, to Beijing’s irritation, that “the two sides of the Taiwan Strait are not subordinate to each other” (两岸互不隶属). In a year of growing hostility across the Strait, such a confrontation is nothing but normal.

In 2021, Beijing ramped up military pressure on Taiwan, including almost daily intrusions into Taiwan’s Air Defense Identification Zone and a series of large-scale military exercises. In the first week of October, almost 150 sorties were recorded, which was called by the Taiwanese defense minister “the toughest situation” in 40 years. In return, the US continued to help beef up the Taiwanese defense and strengthened its military presence in the region. However, unlike his predecessor, Biden showed no appetite for provoking Beijing by sending senior officials to the island. His priority was to internationalize the Taiwan issue as a threat to the security of the whole region. As mentioned, more countries within and without the region have been included in the looming security network. In 2021, two allies, Great Britain and Canada, joined the US to dispatch their warships through the Taiwan Strait. Taiwan also chalked up a tiny yet substantial victory when it opened a cultural and economic office in Lithuania, an EU member, under the name of Taiwan, instead of Chinese Taipei as in most other countries. A furious Chinese government recalled its ambassador and asked the Lithuanian ambassador to leave. The EU voiced its support of Lithuania, further deepening the divide with China.

“The Chinese people will never allow any foreign forces to bully, oppress, or subjugate us.” Amid thundering ovations from the 70,000 gathered in Beijing’s Tiananmen Square to celebrate the centenary of the Party, Xi warned that those who attempt to bully China would “bash their heads bloody against a Great Wall of steel forged by over 1.4 billion Chinese people.” This gory image may sound a bit out of sync with the celebratory atmosphere. Yet it does reveal an emerging new normal in China’s domestic politics and foreign relations.

The first feature of the new normal is the centralization of power both in the state and inside the Party. Since the late 1970s, Chinese leaders had endeavored to reform its political system to decentralize governance but without risking the rule of the Party. As late as 2012, then-premier Wen Jiabao warned of the risk of another Cultural Revolution if China failed to proceed with the political reform. But this process has been undone in the past decade. In the current Chinese political vocabulary, “political reform” denotes nothing but the opposite: to strengthen the absolute leadership of the Party in the state and to maintain the paramount leader’s core position in the Party.

The second feature is the strained relationship with the US and other Western countries. China tends to see the tensions as caused by Western countries’ jealousy of China’s quick ascent. But calling the ongoing US–China rivalry another tragedy of the Thucydides trap misses the other part of the story. The dramatic changes in the US and its allies’ foreign policies are more than responses to the altered distribution of power. They also reflect the West’s frustration with the failure of their engagement policy in the past decades. In their eyes, China’s economic prosperity fails to translate into liberty and freedom in the country. Instead, it fosters Chinese leaders’ desire to challenge existing global rules and order. The past year, 2021, has proved how difficult it is for these two sides to communicate. Like it or not, the New Cold War seems a more appropriate name.

Published online: February 9, 2022